Alexander Sivels, II, real estate consultant, 32, Baltimore, Maryland and Christopher A. Kwegan, real estate agent, 59, Randallstown, Maryland, were each sentenced to 27 months in prison, followed by three years of supervised release, for related mortgage fraud schemes. U.S. District Judge James K. Bredar handed down the sentence and also ordered Sivels to pay restitution of $1,317,314.35, and ordered Kwegan to pay restitution of $530,641.27.
Sivels previously pleaded guilty to wire fraud involving the fraudulent purchase of at least nine properties in Baltimore using fraudulent loan documentation and settlement documents, resulting in actual or attempted losses of more than $1.3 million. Kwegan participated in the fraudulent sale of two properties with losses of more than $530,000.
According to Sivels’ plea agreement and other court documents, Sivels owned Royal Real Estate Consultants LLC, and co-conspirator Cecil Chester worked as an accountant from an office located on New Hampshire Avenue in Hyattsville, Maryland. Co-conspirator Andreas Tamaris, 46, Bel Air, Maryland, purchased, renovated, and then resold distressed row houses in Baltimore City, primarily in Highlandtown. In 2007 or 2008, Sivels met Tamaris and agreed to assist Tamaris to find purchasers for houses he had bought and renovated, or that were owned by developers who owed money to Tamaris for renovation work. Tamaris told Sivels the amount he needed to receive from the sale of each property to recover his investment and earn a profit. Tamaris told Sivels that he could keep any excess funds generated if Sivels sold the house for more than the amount Tamaris needed to cover his costs.
Between 2008 and 2011, Sivels participated in the sale of at least nine properties, all of which were eventually foreclosed upon, resulting in losses of more than $1.3 million. In 2008 and 2009, Sivels and Chester recruited buyers to purchase houses, knowing that they did not qualify for the home mortgages. To enable the buyers to purchase the properties, Sivels and his co-conspirators prepared fraudulent mortgage applications which misrepresented the buyers’ income and assets. Sivels sometimes created fake tax documents and false pay stubs, and falsified bank statements to reflect the substantial balances referenced by the loan application. The conspirators often inflated the price of the house to insure a profit for themselves. At the settlements for the properties, the proceeds of the sale were generally distributed to Tamaris, who would write checks to Sivels for his portion of the profits. From the sale of just four of the properties Sivels received payments totaling more than $200,000.
In 2010 and 2011, Sivels assisted with the sales of several other Tamaris-owned properties by providing prospective lenders with fraudulent verifications of employment for the purchasers, falsely representing that they worked at a home renovation company Sivels owned, receiving cash payments in return for his assistance.
According to his guilty plea, in the summer of 2008, Kwegan learned that the owner of a row house on Washington Boulevard in Baltimore City was trying to sell his home. The owner had purchased the property 10 years earlier for $11,500 and Kwegan told him that he could sell it for $75,000. The owner agreed to sell it for that price. Rather than trying to sell the property at the actual market price, Kwegan requested assistance from Cecil Chester, who was already operating a mortgage fraud scheme and they set the sale price of the row house at $250,000.
Kwegan arranged to use the personal identifiers of an individual recruited by Chester to buy the property as a straw purchaser. Kwegan and his co-conspirators knew that the straw purchaser lacked the necessary assets to pay for the down payments and closing costs on the property, or the income to keep up the mortgage payments on the house after the transaction closed. Chester provided a mortgage loan broker with a false loan application and fraudulent supporting documents which inaccurately represented that the straw purchaser’s employment, annual income, and assets. Based upon these false representations, a bank wired $242,500 to finance the purchase of the property, at the settlement on September 30, 2008. Kwegan used his own funds to obtain a cashier’s check in the amount of $9,391.53 to cover the down payment and the straw purchaser’s share of the closing costs. After the settlement, just $15,773.65 was disbursed to the seller of the property. In contrast, $145,000 was wired to an entity identified as “CAK,” which were Kwegan’s initials. These funds were transferred into Kwegan’s bank account. Kwegan then wrote a check to Chester for $35,000. No payments were made on the mortgage. The property went into foreclosure and remains unsold at this time, resulting in a loss of between $150,000 and $235,000. At today’s hearing, the Court found that Kwegan was also involved in the fraudulent sale of another property with Chester, resulting in a loss of $296,000. Kwegan derived over $100,000 in proceeds from this transaction and paid another $40,000 to Chester for his assistance.
Tamaris previously pleaded guilty to one count of conspiracy to commit mail and wire fraud and is scheduled to be sentenced on November 15, 2016. Co-conspirator Cecil Sylvester Chester, age 69, of Mitchellville, Maryland pleaded guilty to the fraudulent purchase of seven properties in Baltimore, using fraudulent loan documentation and straw purchasers, resulting in losses of over $1.4 million. Chester is scheduled to be sentenced on November 28, 2016. Michael Gerard Camphor, 60, Baltimore, Maryland, previously pleaded guilty for his participation in the fraudulent purchase of four properties in Baltimore resulting in losses of over $736,000. Judge Bredar scheduled Camphor’s sentencing for December 19, 2016.
The sentences were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Gordon B. Johnson of the Federal Bureau of Investigation; Special Agent in Charge Bertrand Nelson of the U.S. Department of Housing and Urban Development Office of Inspector General; and Special Agent in Charge Brian Murphy of the United States Secret Service – Baltimore Field Office.
“Mortgage fraud perpetrators steal by inducing lenders to make loans that will never be repaid, and they harm neighborhoods when the inevitable foreclosures drive down property values,” stated U.S. Attorney Rod J. Rosenstein.
United States Attorney Rod J. Rosenstein commended the FBI, HUD OIG – Office of Investigations and the U.S. Secret Service for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Jefferson M. Gray, who prosecuted the cases.